chapter 16 Flashcards
Internal users
are the people within a business organization who use accounting information
External users
are people outside the business entity that use accounting information
Financial accounting information
appears in financial statements that are intended primarily for external use (although management also uses them for certain internal decisions)
Generally Accepted Accounting Principles (GAAP). GAAP
are a uniform set of accounting rules that allow users to compare the financial statements issued by one company to those of another company in the same industry.
Financial Accounting Standards Board (FASB).
The FASB’s mission is “to establish and improve standards of financial accounting and reporting that foster financial reporting by nongovernmental entities that provides decision-useful information to investors and other users of financial reports.”
Tax accounting information
includes financial accounting information, written and presented in the tax code of the government
Managerial accounting information
is for internal use and provides special information for the managers of a company
income statement
The financial statement that reflects a company’s profitability
balance sheet
reflects a company’s solvency and financial position
statement of owner’s equity—also called the statement of retained earnings—
shows the change in retained earnings between the beginning and end of a period
statement of cash flows
shows the cash inflows and outflows for a company during a period of time.
financial accountants prepare financial statements in the following order:
- Income Statement
- Statement of Retained Earnings
- The Balance Sheet
- The Statement of Cash Flows
Assets − Liabilities =
Equity
income statement,
reports the profitability of a business organization for a stated period of time
